A federal court in Arizona has shut down Vemma Nutrition, a company that many say duped college kids out of hundreds of millions while paying them little or nothing. According to the Associated Press, the shutdown came after the Federal Trade Commission filed a complaint against Vemma, claiming the company was little more than a pyramid scheme aimed at impressionable college students.
There seems to be quite a bit of evidence to validate the consumer protection agency’s complaint.
— CNBC (@CNBC) August 27, 2015
Vemma Nutrition has a line of energy drinks that one would expect to occupy the center of the company’s sales pitch, both to potential associates (who sell the drinks) and would be customers. Instead, the company focuses on how “rich” college students will allegedly become working for them. Bloomberg reports that the young adults were told that Vemma could replace a full-time job, and gave away promotional materials that featured luxury images. There was also the promise of earning a $50,000 per year income in as little as 90 days.
Living the good life required a significant financial investment on the part of potential employees. They were to cough up $600 for access to Vemma Nutrition products. But that was little more than a pricey starter kit. Each month, these employees were asked to buy $150 worth of products.
To get back into black, associates would have to sell thousands of dollars worth of Vemma products to customers. They had no direct help from the company, which Bloomberg reports opted for vague motivational quotes over concrete sales plans.
— azcentral (@azcentral) August 26, 2015
Such a lack of guidance could explain why nearly 90 percent of Vemma’s employees averaged less than $3,674 per year. Meanwhile, Vemma Nutrition averaged $200 million per year between 2013 and 2014. Vemma’s justification for this mass discrepancy? CEO Benson Boreyko feels the employees simply weren’t trying hard enough.
Well, that explanation didn’t fly with the federal government. Boreyko, Vemma promoter Tom Alkazin, and his wife Bethany Alkazin were all named as defendants in the complaint. In addition to their company getting shut down, the federal court temporarily seized its assets. Vemma products are currently unavailable for purchase.
Shutting down Vemma is supposedly a temporary action, but there’s a good chance we are witnessing the beginning of the end of Vemma Nutrition.
There’s a lesson in this: If it sounds too good to be true…expect to lose more money than you started with!
[Image Credit: Screen Grab From YouTube]